Find the right mortgage term and amortization period

Find the right mortgage term and amortization period

Since January 2018, qualifying for a mortgage has been very challenging for first-time homebuyers, unless they got a “down payment” gift from a family member.  As we have discussed numerous times, the federal stress test and climbing prices are the main reason why it is so difficult to get that first home.  

However, getting approved for a first mortgage goes beyond having a good credit score and saving for a downpayment. One of the most important factors of this equation is to choose the right mortgage term and amortization as these will have a lasting impact on your mortgage payments and refinancing plans.  (Click on term and amortization to know more about these two terms). 

Once you establish your mortgage amortization and term, you move on to determine how often you will want to pay your mortgage.  As we have discussed before, you have many choices when it comes to frequency of mortgage payments: these can be monthly, bi-weekly, accelerated bi-weekly, weekly or accelerated weekly.  Check our blog post on “mortgage terms” to find out the difference about these payments or consult Carmen Costa’s book on “The Reality of Mortgages: a step-by-step guide”.  

In order to avoid being in a situation where you are paying more than you can afford when choosing how much mortgage to borrow, it is imperative you look at all the expenses you will have related to your home: your utility bills, property taxes, insurance and maintenance costs.